Using a Business Lawyer to Support Your Divorce Mediation in Wellesley

A business lawyer who is trained in alternative dispute resolution can support your divorce mediation in Wellesley in several ways.

One of the most important aspects of a divorce is often the division of property. Assets that were once “ours” have to become “yours” and “mine.” Because of a well-known cognitive bias called the Endowment Effect that makes it difficult for people to give up something they have once touched, the transition can become contentious. Many people use mediation to make the negotiation easier and less expensive than having lawyers fight about it.

If your financial situation is complex, a business lawyer can help untangle it or find ways for you and your soon to be ex-spouse to share ownership. For instance, if you have complex assets that are hard to split like a family business, creative properties that generate licensing revenue or private equity fund (alternative investments) interests, it may be best to hold them in a partnership structured to manage any ongoing conflict. If you hold investments that are subject to a buy-sell arrangement, you may need to navigate them in a way that does not trigger an early liquidation.

A corporate lawyer who is also a mediator can support your family mediation process around business issues, either as counsel or as co-mediator. He is able to bring a different set of experiences than many family mediators without taking away from the good work your mediator is doing on other issues.

Finally, unlike many litigators, a business lawyer is used to working together with people to find solutions. His initial approach is likely to be more collaborative, in the interest of maximizing value for his clients, rather than confrontational, in the interest of winning a contest. It can be a good fit for divorce mediation with complex financial situations.

Using LLCs and Partnerships to Hold Assets in Divorce

Broken Heart

Dividing property in divorce can be one of the most complex aspects of dissolving a marriage. Some property is difficult or impossible to divide. Other kinds are difficult to sell or value. In these cases, it may make sense to move the property into a limited liability company (LLC) or partnership that both spouses own after the divorce goes through.

For instance, creative properties are notoriously difficult. While some experts claim to be able to predict the value of a stream of license payments, royalties or book sales, the creators are often not comfortable with the number. If both spouses participated in writing the book, making the movie or developing the app, then they both may feel proprietary toward the property, which would make giving it up that much harder. Holding the property in an LLC that splits the income stream can be a good solution.

Similarly, alternative investments are often troublesome. While some hedge fund interests can be redeemed, a secondary market exists for others and still others can be split, it may not make sense for particular investments. Interests in private equity funds and venture capital funds, particularly those held by employees, are rarely possible to divide or sell without negative consequences. Creating an LLC or partnership to hold the assets works for many couples in this situation, if the details can be worked out.

Even some stock that one spouse holds as an employee may benefit from this kind of arrangement.

For the LLC or partnership concept to work, it is often best for one of the divorcing spouses to be the primary manager. Asking both of them to participate in day to day decisions is difficult; they may not have communicated well about financial matters during their marriage, so it is not always wise to ask them to communicate about financial matters afterwards. Sometimes, the particular asset itself requires one former spouse to maintain control, like employee-held alternative investment funds and stock.

It is possible to split the income stream in interesting ways to address the parties’ notions of fairness. Consider a couple that has written two books, each of which has one party listed as an author but which was really written by both. The parties can divide up the income so the named author gets 75% of the proceeds and the other gets 25%.

Finally, using an LLC or partnership can help for estate planning purposes. People often want to leave specific pools of money or creative properties to their children, and want to make sure any subsequent spouses or children have no claim. While a separation agreement can address these concerns, it is often easier, clearer, more flexible and much more private to address the issue in a document that does not get filed with the court.

While they are not for all couples, in the right circumstances limited liability companies and partnerships make sense as tools to untangle a messy property division.

Ending Business Decision Gridlock: Considering a Business Divorce

When a business owner works alone, the decisions, successes or mistakes are all the responsibility of one individual. He or she is the boss. When there are other partners involved, however, disagreements over business decisions are both likely to occur and difficult to manage. Whether the business operates as a corporation, a limited liability company or a partnership, arguments over important business decisions can halt the flow of work and generate tension between partners. When disputes with partners are impacting your ability to operate effectively, it may be in your best interest to contact a business lawyer in Massachusetts (if you are in the greater Boston area) to consider your options. Considering whether business divorce makes sense – that is, separating from a business partner – may prompt the partners to be able to discuss critical issues and determine next steps for the company. People can make better business decisions if they understand that they have choices and that each choice can lead to different legal outcomes.

Rearranging the operating structure of the business may solve some problems. If owners have different spheres of day-to-day responsibility, their interactions may become less stressful. Other problems cannot be solved so easily. One or more of the partners may want or need to be bought out. Depending on the company’s documentation (such as shareholder agreements or buy-sell agreements), the buyout discussions can be complex. How do you value the company? On the level of negotiating dynamics, do both the partner leaving and the partner staying have such an identification with the company that direct discussions are almost impossible? If the partners cannot agree, they are often surprised at the limited range of options that a judge has when dealing with these situations. It is rarely in anyone’s interest for the business to be put into receivership.

Even though partner problems are as common in business as they are in marriages, not all businesses end up in business divorce. A business lawyer can help you explore your situation and learn about your alternatives.